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SMM Morning Comment For SHFE Base Metals December 5

iconDec 5, 2023 09:58
LME copper prices opened at $8497/mt and closed at $8427/mt in overnight trading, a drop of 2.3%, with the low-end of $8427/mt and the high-end of $8515/mt.

SHANGHAI, December 5(SMM) –
LME copper prices opened at $8497/mt and closed at $8427/mt in overnight trading, a drop of 2.3%, with the low-end of $8427/mt and the high-end of $8515/mt. Trading volume was 26,000 lots, and open interest stood at 279,000 lots. The most active SHFE 2401 copper contract prices opened at 68380 yuan/mt and closed at 68190 yuan/mt last evening, down 0.9%, with the high-end of 68560 yuan/mt and the low-end of 68070 yuan/mt. Trading volumes stood at 34,000 lots and open interest stood at 167,000 lots. On the macro front, U.S. factory orders fell by 3.6% on a monthly basis in October, which was larger than the expected 2.6% drop and was the lowest level since April 2020. A report released by the New York Fed on Monday showed that its multi-core trend inflation measure (MCT) was at 2.6% in October, down from 2.88% in September. In addition, First Quantum reached an agreement with the Zambian Mining Company to accelerate the development of the Fishtie copper mine. On Fundamentals, as of Monday December 4, SMM copper inventories across major Chinese markets stood at 54,000 mt, down 900 mt from last Friday and 53,400 mt lower than the same period last year. Neither imported copper nor domestic copper arrived in large quantities in East China, causing inventories to decline. In South China, as copper processing companies that had suspended production previously resumed production one after another, the recovery in demand also led to a decline in inventories in South China. In terms of consumption, high market prices coupled with high premiums still suppress downstream demand. Due to the influence of low inventory, copper prices will rebound in the near future.
Overnight, the most-traded SHFE 2401 aluminum contract opened at 18560 yuan/mt, with its lowest and highest at 18380 yuan/mt and 18575 yuan/mt before closing at 18475 yuan/mt, down 170 yuan/mt or 0.91%. LME aluminum opened at $2,204/mt on Monday, with its high and low at $2,213/mt and $2,174/mt respectively before closing at $2,184/mt, down $16/mt or 0.73%.
Federal Reserve Chairman Powell sounded cautious about further interest rate action in his speech on Friday, saying the risks of under- or over-tightening were now more balanced. The market believes that his speech is dovish and that the Fed may have completed raising interest rates. Domestic macroeconomic data are weakening, and the manufacturing PMI index has been below 50% continuously. Market pins hopes on release of domestic favorable policies at the end of the year, but it will still take time to transmit to the manufacturing industry and other sectors. In terms of fundamentals, there are no further changes expected on the supply side in the short term, and market trading logic generally focuses on the resilience of consumer demand in the off-season. The short-term macro atmosphere is weak and the consumption off-season has a greater impact. Aluminum prices may remain weak and fluctuate. At the same time, inventory continues to be reduced, which has given aluminum prices certain support.
LME lead opened at $2128/mt and rose during the Asian trading hours yesterday, rising to $2131.5/mt during the European trading hours. It finally closed at $2093/mt, down $33.5/mt or 1.58%, falling for 11 consecutive days.
The most-traded SHFE 2401 lead contract opened at 15700 yuan/mt and fell 70 yuan/mt or 0.45% to close at 15630 yuan/mt last evening, briefly hitting the lowest point at 15600 yuan/mt and the highest point at 15770 yuan/mt.
Overnight, LME zinc opened at US$2,512/ton and touched a high of US$2,523/ton. During the European trading session, the LME zinc fluctuated all the way down, reaching a low of US$2,437/ton at the end of the day, and finally closed down at US$2,438.5/ton, down $81/ton, or 3.21%. Trading volume decreased by 1,256 lots to 9,589 lots, and open interest decreased by 1,318 lots to 201,000 lots. LME stocks decreased by 1,575 tons to 222,700 tons, a decrease of 0.70%. The U.S. dollar index rebounded. U.S. factory orders in October was lower than expected and recorded -3.6%, the lowest level since April 2020.
Overnight, the most-traded SHFE 2401 zinc contract opened at 20680 yuan/mt and touched a high of 20745 yuan/mt before closing at 20555 yuan/mt, down 285 yuan/mt or 1.37%. Trading volume decreased 47784 to 44,300 lots, and open interest increased by 3460 lots to 89,800 lots.
vernight, SHFE 2401 tin contract rose to 203,130 yuan/mt and then fell slightly, closing at 201,790 yuan/mt, up 1.07%.
During yesterday's morning trading, the price premiums and discounts quoted by trading companies for various domestic tin ingot brands had little change from last Friday. Small brand tin ingots were offered at around premiums of 200-400 yuan/mt. Delivery brands were offered at premiums of 500-800 yuan/mt over SHFE 2401 tin contract. The Yunnan tin brands were offered at premiums of 1,000-1,100 yuan/mt over SHFE 2401 tin contract. Imported tin brands’ spots were offered at discounts of 600-500 yuan/mt. Generally speaking, tin prices rose slightly during the session and then fell back. The spot market transactions yesterday showed a differentiated trend, with a small number of companies seeing relatively hot transactions.
On December 4th, the most-traded SHFE nickel contract opened at 131,380 yuan/mt, and closed at 128,460 yuan/mt, down 920 yuan/mt. Trading volume rose 3,031 lots, and open interest increased by 1,188 lots. From a macro perspective, the Federal Reserve continues to be dovish and a number of data reflect the economic decline in the U.S. market. Market expectations for the Federal Reserve to cut interest rates have increased, and commodities are bullish. From a fundamental perspective, pure nickel social inventories still show a trend of accumulation, and downstream orders have not picked up significantly yet, reflecting the poor transaction in the market yesterday. Nickel price is expected to decline and then move rangebound.

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